Stocks Bounce Back as Banks Soar
Stocks opened higher Wednesday as investors hope President Barack Obama's economic team will bring clarity to the markets.
The Dow Jones Industrial Average jumped more than 100 points, or more than 1 percent, in the first few minutes of trading. The S&P 500was flatand the Nasdaq shot up 2 percent.
On Tuesday, the Dow ended below 8,000for the first time in two months and marked the index's worst decline on Inauguration Day in history.
President Obama's nominee for Treasury Secretary, Timothy Geithner, is likely to get grilled during a hearing in the Senate over his failure to pay tens of thousands of dollars in taxes when he was working as an International Monetary Fund official, but his expertise may be too precious to be lost, and he looks on track to be confirmed.
Better-than-expected news came on the earnings front from IBM, which beat Wall Street estimates for quarterly earnings, due to tight cost controls and a lower tax rate. IBM also forecast a higher-than-expected 3 percent rise in 2009 earnings per share.
Also in the technology sector, Swedish telecom equipment giant Ericsson posted a stronger-than-expected fourth-quarter profit but announced 5,000 job cuts as it seeks deeper cost cuts.
Meanwhile, General Motors expects the money from a government aid package to arrive in the next few days, as the giant car maker faces a cash shortage.
Fritz Henderson, GM's president and chief operating officer, said that without the second installment of $5.4 billion, the company would run out of cash long before the end of March. The stock rose more than 2 percent in Europe.
And Goldman Sachs cut CNBC parent General Electric's share price target to $15 from $17 and its earnings forecast to 36 cents per share from a previous estimate of 45 cents, but said the company's industrial cash flow can sustain its dividend this year.
In earnings, fund manager BlackRock said fourth-quarter net income fell 84 percent and its earnings were 68 cents a share, badly missing estimates of $1.26.
Also, United Tech said fourth-quarter profit rose 8 percent, translating to $1.23 a share and beating analysts' estimates by a penny.
Delta Airlines and US Bancorp are among companies also reporting earnings before the bell.
Bank stocks rebounded after getting crushed on Tuesday.
Citigroup and Bank of America shares jumped more than 10 percent, after losing more than 20 percent Tuesday.
And Wal-Mart saw its shares slip 1 percent after Credit Suisse cuts its outlook for the world's leading retailer from "outperform" to "neutral."
Asian stocks closed down while European markets were also trading lower, dragged down by nationalization fears for the banks.
WEDNESDAY: Geithner hearing starts at 10 am ET; Earnings from Burlington Northern after the bell
THURSDAY: Housing starts; jobless claims; crude inventories; Earnings from Nokia, Fifth Third Bancorp; KeyCorp; Southwest Air; SunTrust Banks; United Health, Union Pacific, Microsoft, AMD, Capital One
FRIDAY: Natural-gas inventories; Earnings from GE, Harley-Davidson and Xerox
ALL WEEK: Detroit Auto Show (Jan. 11-25)
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